Conventional vs. FHA vs. VA vs. USDA loans: what's the difference in Texas?

It means a government agency insures or guarantees part of the loan for the lender. The government isn't lending you the money; the lender is. But because the lender has that backing, it can be more flexible on some things.

In exchange, these loans come with their own rules: what kind of home you can buy, what condition it has to be in, and sometimes who can use the loan.

It's the "standard" loan, the one with no government backing. A bank or mortgage company makes it, following its own rules and the rules of the companies that buy those loans afterward.

Generally designed for: buyers with a stronger credit history and some savings for a down payment.

Worth knowing:

• It can be used for the home you'll live in, and also for a second home or a rental property.
• If you put less down, mortgage insurance is usually added. It protects the lender, not you. On a conventional loan, that insurance can be removed later under certain conditions. Your lender explains which ones.

It's a loan insured by the Federal Housing Administration, which is where the letters FHA come from.

Generally designed for: buyers whose credit is still being built or who have less saved for a down payment. Many first-time buyers use it, though it isn't only for first homes.

Worth knowing:

• It's for the home you'll live in, not for investing.
• It carries its own mortgage insurance, with different rules from a conventional loan.
• The home has to meet certain safety and condition standards. If the appraisal flags something, it sometimes has to be fixed before closing.

It's a loan guaranteed by the Department of Veterans Affairs, which is where VA comes from.

Generally designed for: eligible veterans, active-duty service members, and some surviving spouses. You need to show that eligibility, and your lender helps you request the document.

Worth knowing:

• It's for the home you'll live in.
• It tends to offer very favorable terms for people who qualify, but the exact terms are confirmed by your lender.
• It also checks the home's condition through its own appraisal.

If you or someone in your household served in the military, bring it up in the very first conversation. Many families don't know they qualify.

It's a loan backed by the U.S. Department of Agriculture, which is where USDA comes from.

Generally designed for: families buying in areas USDA considers eligible, usually rural or on the edges of cities, whose income falls within the program's limits.

Worth knowing:

• It's for the home you'll live in.
• The address matters: the home has to be in an eligible area. Some areas on the outer edges of the metroplex may qualify; your lender checks the map with the exact address.
• The income that counts can be the whole household's, not just the person signing.

The rules for these loans change over time, and each lender can ask for a bit more than the minimum. That's why I'm not giving you numbers here. A percentage someone quoted you a couple of years ago, or one that worked for a friend, may not apply anymore. Your lender confirms what applies to you, today.

Then the loan type matters on the selling side too:

• If you want to keep your current home as a rental, FHA, VA and USDA are for the home you'll live in, and your lender tells you how owning both affects you.
• If you're selling your home, your buyer may bring any of these loans. Some look at the home's condition more closely, and it helps to know that before you negotiate.
• The down payment on your next home often comes from your sale. Here's how the down payment for your next house is in your current house.

1. Know your credit before you go in. If you're just starting out, here's how to prepare from zero.
2. Gather your income documents and account statements. You'll be asked for nearly the same ones with any loan.
3. Ask about every type, not just the one someone mentioned. Sometimes you qualify for more than one, and comparing helps.
4. Talk to a lender before you tour homes. If you're also selling, do it before the sign goes up. Here's why you talk to the lender before the sign goes up.

Which one is cheapest?

It depends on your credit, your down payment and the home. The useful move is to ask your lender to compare two options side by side, with the full costs, not just the rate.

Is FHA only for first-time buyers?

No. A lot of people use it for their first home, but that isn't a rule.

Will you tell me which one is right for me?

I'll explain each one and help you prepare your questions. The recommendation on which loan to use comes from your lender, because your lender sees your full numbers.

Will I get approved?

I can't promise that, and no honest person can. What I can do is help you show up prepared and connect you with the right lender for your situation.

Conventional, FHA, VA and USDA aren't words meant to scare you. They're four different doors into a home. Knowing who each one is designed for lets you walk into the conversation with your lender with your own questions, not just theirs.

Want to prepare for that conversation?

Call or text me at 469-441-8890, or email veronica@veronicayeary.com. I'll help you gather what you'll be asked for and connect you with the right lender for your situation, with no commitment and nothing to sign.

I'm Veronica Yeary, a real estate agent in Dallas-Fort Worth, CRS®, ABR®, SRS® and CIPS, in real estate since 2010. I walk with you step by step, from the first question to the keys.

469-441-8890 · Text or call · veronica@veronicayeary.com · Email